[EN] Keynote Exchange Summit: Integration of E-Invoicing Into The Existing IT Landscape | Dr. Ulrich

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PROJECT CONSULT
Unternehmensberatung Dr. Ulrich Kampffmeyer GmbH
www.PROJECT-CONSULT.com
© PROJECT CONSULT 2015
P.O. Box 20 25 55
D-20218 Hamburg
1
© PROJECT CONSULT Unternehmensberatung Dr. Ulrich Kampffmeyer GmbH 2011 / Autorenrecht: <Vorname Nachname> Mrz-16 / Quelle: PROJECT CONSULT 1
Integration of E-Invoicing
Into The Existing IT Landscape
Dr. Ulrich Kampffmeyer
October 5 to 6, 2015 | Barcelona, Spain
Exchange Summit

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The Integration of E-Invoicing Exchange Summit, October 5 to 6Dr. Urlcih Kampffmeyer 2
Agenda
Integration of E-Invoicing Into The Existing IT Landscape
• Prologue
• The format is only part of the story
• The German approach to e-invoicing:
the ZUGFeRD format
• Processes and systems involved
• A process map
• Creation and delivery of electronic invoices
• Reception and processing of electronic invoices
• Storing and managing electronic invoices
• Epilogue
• Local, regional and global
• The e-invoice – just the beginning

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Dr. Urlcih Kampffmeyer Exchange Summit, October 5 to 6The Integration of E-Invoicing
THE FORMAT IS ONLY PART
OF THE STORY
1 PROLOGUE

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Prologue
The invoice is one of the most important documents in
commercial life.
A no-brainer:
With the increasing digitalization of communication
and commercial life, the invoice must obviously also
become digital and be supported by digital processes.

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Prologue
The goal of the standardization of electronic invoice
exchange is the extensive automation of invoice
generation and processing with a simultaneous
decrease in cost and effort, while ensuring that
electronic invoices are legally valid.

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Prologue
Discussion of electronic invoicing centers often only
on questions of format and exchange.

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Prologue
Discussion of electronic invoicing centers often only on questions of
format and exchange.
The technical format is irrelevant as long as all legally
mandated information is complete and correct. You
may use
• paper
• e-mail
• text file
• data record
• PDF
• a.s.o.

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Prologue
The technical format is irrelevant as long as all legally mandated information is complete and
correct. You may use
• paper
• e-mail
• text file
• data record
• PDF
• a.s.o.
Electronic invoices are sent through various channels:
• EDI / X.400 messages
• e-mail with attachment
• download from portal
• web via service provider
• fax
• a.s.o.

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Prologue
Electronic invoices are sent through various channels:
• EDI / X.400 messages
• download from portal
• web via service provider
• fax
• a.s.o.
Three major principles compete:
• e-invoice direct delivery
• e-invoice provision for download
• e-invoice via service provider

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Prologue
Three major principles compete:
• Delivery
i.E. by e-mail: not always reliable
i.E. via service provider: controlled, but subject
to trust and service level
• Download
i.E. from a portal: you can prove the receipt
&
• Hybrid
i.E. a message with the download link
These are crucial processes on the e-invoice
process map.

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11
1 PROLOGUE EXCURSION
THE GERMAN APPROACH
Integration of electronic invoices
into existing IT landscapes

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The German Approach
• The current discussion on electronic billing in
Germany concentrates on a specific form of
exchange of electronic invoices:
• Transmission by e-mail, via portals or provided by
web services
• Combined format made up of an XML data set and a
displayable document of the invoice, bundled in a
PDF/A-3 container
• This is just one of the possible accepted type of an
electronic invoice – but recommended in current
legislation and tax regulations.

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ZUGFeRD
• German standard for electronic invoices:
“ZUGFeRD
Zentraler User Guide des Forums elektronische
Rechnung Deutschland”
(central user guide of the Forum electronic Invoicing
Germany)
• Version 1.0, March 2014
• Issued by the association “FeRD
Forum elektronische Rechnung Deutschland”
(Forum electronic Invoicing Germany)
• Consignment of standardized e-invoices as PDF with
integrated XML data set for automated processing
• Complements EDI standards like EANCOM
• Matches international standards and can be used in
European and international e-billing

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Positioning ZUGFeRD
Formats and provision of invoices:
Image file
via e-mail
PDF-
/text-/…
file via
e-mail
Web EDI EDIPaperr
ZUGFeRD
PDF/A-3
incl. XML
via
e-mail

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ZUGFeRD
Machine-readable
3 different XML schema
available, including
international standards
Use case
Automated processing
Eye-readable
Document(s)
Use case
Manual processing
Container
Standard ISO 19005-3 PDF/A-3
Use case
Global availibility of viewer and
suitable for retention/archiving
ZUGFeRD hybrid format

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Challenges for ZUGFeRD
• The current German XML schema is not completely
compliant with the planned European standard, but
• Core invoice attributes and model are included in ZUGFeRD
XML
• CEN MUG was source for ZUGFeRD-XML
• UN/CEFACT XML CII (Cross Industry Invoice) is included in
ZUGFeRD-XML
• Special software is required to build an invoice object and
to unpack the object at the receiving party
• the current trend favours a simple XML format
• Three different processes needed for handling ZUGFeRD:
(1) the PDF object,
(2) the XML data,
(3) the eye-readable document.
But – which is the legally relevant part of the object to be
retained as evidence record – 1, 2, 3 – or all? That depends …

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Status ZUGFeRD
Alliance for the hybrid format
• French/German co-operation on a hybrid format:
Intervention to the EUMSF eInvoices AGS;
dated Sep. 18, 2015.
France and Germany are jointly working on the hybrid format
standard since end of September, 2015.
• The German/French hybrid concept,
based on the proposals of the national organisations FNFE
(France) and FeRD (Germany),
will be presented at the Governmental Meeting on Digitisation,
Paris, Oct. 27, 2015.

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???
But:
National - and even regional -
standardization does not make sense
in a globalized world.

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20
2 PROCESSES, AND THE SYSTEMS
INVOLVED
Integration of electronic invoices
into existing IT landscapes

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Electronic invoice exchange
Sender Recipient
generates
receives,
processes &
… pays!
B
It looks quite simple 

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What can happen?
The electronic invoice itself:
Simple Collective Pro
forma
Annulation Corrected Copy
S RB
…
Various

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A Process Map
This main part of the presentation does not deal with
the exchange and the different formats,
but with the processes before the invoice is
transmitted and after it is received.

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A Process Map
This main part of the presentation does not deal with the exchange and the different formats,
but with the processes before the invoice is transmitted and after it is received.
Types of processing:
• Manual processes
• Manual / semi-automated processes
• Automated processes

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A Process Map
• Manual processes
• Manual / semi-automated processes
• Automated processes
The different types address different user groups and
different use cases:
• Automated processing
• Large and midsize enterprises
• Public sector organisations with high invoice volumes
• Manual (and semi-automated) processing
• SME small size businesses
• Consumers
• Public sector organisations with low invoice volumes

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Topic
The different types address different user groups and different use cases:
Different focus of processes:
• Direct or concerning the invoice and its processing
only
• Indirect, supports working with the invoice and
includes related processes

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Topic
Type of process:
• Direct or only concerning the invoice and its processing
• Indirect, supports working with the invoice
Objective of processing:
Generation Reception
Transmission Processing
Management
Retention
S R
S & R

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A Process Map
The big question:
Who is the user?

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Complexity: everyone with anyone
S R
Small company
Manual
Word processing
Accounting software
Freelancer
Manual
Word processing
Tax accountant
Medium-sized company
Manual
Semi-automated
Accounting software
Semi-automated
ERP
Large Enterprise
Automated
full scale ERP
Corporation
Semi-automated and
automated
Multiple ERP
R S

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Complexity: everyone with anyone
S R
Small company
Manual
Word processing
Accounting software
Freelancer
Manual
Word processing
Tax accountant
Manual
Semi-automated
Accounting software
Semi-automated
ERP
Large Enterprise
Automated
full scale ERP
Corporation
Semi-automated and
automated
Multiple ERP
R S
+
(retarded)
public sector
organizations
+
service
providers
+
consumers
+ + + + +

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A Process Map
The goal is preferably extensive and cost-effective
automation …
• In a company or administration the accounting
normally is homogenous and thoroughly organized.
Electronic invoice exchange raises the problem of
different formats, processes and systems mainly
with the receiver of the invoice.

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Processes
Creation and delivery of
electronic invoices
Major Processes
• Initialization
• Creation
• Checking & releasing
• Provision for delivery & transmission

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S The creator and sender
Typically, the creator and sender of an electronic
invoice defines the form in which the e-invoice is
delivered.
The sender must consider:
• Are the receivers prepared to receive e-invoices or
will they demand additional invoicing on paper? Or
other format? Or other media? Or other channel?
• A company- and industry-specific invoicing software
solution requires attention on the efforts for
on-boarding business partners and even the
reduction of suppliers.

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The context of the invoice is known to the creator:
• Subject of invoicing
• Receiver of invoice
• Master data
• a.s.o.
The surroundings are controlled:
• Context
• Invoice number
• a.s.o.

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One-man shows and small companies

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• Manual creation of invoicing, even word processor
• Manual booking
• Single delivery channel via e-mail
• Repository of invoice in a simple file system
• Archiving of accounting data and documents
(in-house or by a service company)

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• Manual creation of invoicing, even word processor
• Manual booking
• Single delivery channel via e-mail
• Repository of invoice in a simple file system
• Archiving of accounting data and documents
(in-house or by a service company)
Integration into the IT application environment:
• Invoicing templates for word processing;
subject on the interest and style of the sender
• Automated output format for the accounting system;
dependent on the software vendor
• Automated delivery and filing from the accounting
system; dependent on the software vendor

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Accounting E-mail
Text processing

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Medium-sized and large companies
• Due to the variety of solutions and processes, we
can consider only examples here.

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Direct invoicing processes
• Manual or automated trigger for creation of invoice
• Automated creation of invoices from accounting
data / ERP with configuration of invoice via master
data, process data and case data
• Automated provision of invoice by
• Push
Delivery of invoice (e-mail, X.400)
• Pull
Delivery of notification that the invoice is ready to
download (e-mail, SMS, social etc.)

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Different complexities of invoicing require
different forms of integration:
• Standardized off-the-shelf products and services
with general electronic order and transaction
processes.
• Invoicing is initiated by these processes and
generally doesn‘t require manual action.
• Individual or specially configured services and
products that also involve individual accounting.
• The invoice is generally initiated manually and
typically requires verification and approval processes;
possibly even reconciliation processes with the
invoice recipient.

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Indirect processes within the scope of invoicing
• Manual examination of match with order, fullfillment
status and contractual conditions
• Automated verification against master data and
case data, residing outside of the financial system,
with which the invoice is created (i.E. project
management system, stock management, time
recording, CRM)

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Integration into the application environment
• Primarily for the software creating the invoicing
• Creation of accounting records that use master data
to create automated and parameterized invoices in
the recipients’ required formats, ready for delivery/
provision and organized for filing
• This functionality is generally provided by the
vendor/ systems integrator of the ERP, accounting
or financial software

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• Secondary for the software used for handling and
processing the invoice outside the financial applications:
• Notification of the responsible auditor with direct link to the
accounting records and any invoicing document that may
already have been created that will be delivered to the
recipient
• Notification of accounting records and documents, and
release and annotation functionality; if necessary auditable
This functionality generally has to be provided via access
authorization, inclusion of notification systems or separate
workflow/ collaboration solutions.

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Medium-sized and big companies: internal
Accounting/ERP
CRM
Client
Rechnung
Other
Project management
Service
Time tracking
contracts
Other
Product Resource planning
Order database
Other

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Medium-sized and big companies: output
Accounting/ERP E-Mail
Portal
Print
Fax
SMS Notation
EDI / X.400
Master data
Converter
et al.
Data
Data
Data & document
Document
Data/document
Data/document
Invoice

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Processes
Reception and processing
of electronic invoices
Major Processes
• Identification & Pre-Processing
• Booking
• Releasing
• Post-processing for procurement

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R The recipient and processor
• Regardless of how and in what format invoices
reach a recipient,
they are basically processed in the same manner,
with the same methods and with the same quality.
(at least “should” be processed in this way)

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• Regardless of how and in what format invoices reach the company,
they are basically processed in the same manner and in the same
quality.
• The receiver is driven from the outside.
• The receiver can seldom refuse receipt of an
electronic invoice.
• Should the receiver use own solutions or portals for
electronic invoices, these must be equipped for the
reception and processing of different external
formats.

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• Regardless of how and in what format invoices reach a recipient,
they are basically processed in the same manner, with the same method and
in the same quality.
• First, the context of the invoice is only partially
known:
• Order
• Delivery note/performance report
• Master data
• Contract
• Sometimes, the invoicing and vendor history
• The necessary information for releasing and paying
the invoice is gathered throughout a multi-step
process involving different systems and even media
gaps.

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they are basically processed in the same manner, with the same
method and in the same quality.
It is of importance, wether
(1) the invoice is
a) only structured data (i.E. EDI),
b) data plus document (i.E. ZUGFeRD) as
attachment of an e-mail; or
c) document only (fax, scan, PDF attachment) via
e-mail or download
(2) the invoice was already a digital original or if it was
transferred by the recipient into an electronic
format (i.E. scanned paper with OCR, classification
and extraction of invoice data)
Processing (2) may relate to the processing of images,
fax, pdf, a.s.o. with (1c)

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they are basically processed in the same manner, with the same method and
in the same quality.
Already with the reception and interpretation of
incoming invoices a bundle of different, interacting and
even iterative sub-processes are involved, to prepare
the invoice for further (automated) processing.
The capture and preparation process should generate
the same quality independently of the original medium
of the invoice.

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• Entry in the e-mail inbox as an e-mail with
attachment (fax as well)
• Indirect reception in the e-mail inbox as a link to the
invoice download portal. Download to file system.
• (Scanning of paper invoice)
• Filing in special e-mail-folders, file system folder,
data registers and/ or document management
system (and/ or even print) etc.
• Booking by own accounting staff or forwarding to a
service provider for booking and processing

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• Entry in the e-mail inbox as an e-mail with attachment (fax as well)
• Indirect reception in the e-mail inbox as a link to the invoice download portal
• (Scanning of paper invoice)
• Filing in special e-mail-folders, file system folder, data registers and/ or document
management system (and/ or even print) etc.
• Booking by own accounting staff or forwarding to a service provider for booking and
processing
is mainly an organizational issue, because…
• Entry is primarily by standard e-mail,
• Booking is manual or through third parties,
• Dedicated approval and release processes are rarely
necessary.

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E-mail Accounting
Download
Fax
E-mail
upload
Service provider
Scan

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• Due to the variety of solutions and processes, we
can consider only examples here.

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Reception and import
• EDI
Automated reception, logging, transformation,
validation, import to booking system, releasing,
archiving.
Manual processing only if inconsistencies or
mistakes are recognized.

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• EDI
Automated reception, logging, execution, validation, import to booking system, archiving.
Manual processing only if inconsistencies or mistakes are found
if automatically recognized as invoice, directed to
invoice capture process.
Manual or partially automated processes.

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• EDI
if automatically recognized as invoice, directed to invoice capture process.
Manual or partially automated processes.
• Paper invoice
Scanning, quality and completeness check,
OCR/ICR, classification, verification with existing
master and process data, preparation for export to
ERP and archive,
automated or manual processing according to
company practice

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• EDI
• E-mail with attachment
• Paper invoice
Scanning, quality assurance, OCR/ICR/ classification, comparison with master data,
automated or manual processing according to company practice
• Workflow-based invoice exchange
(for example via portals with known partners or
intelligent self-contained invoice objects):
Automated reception of standardized
data/documents, download, examination,
verification, automated processing with import to the
finance system

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Invoice processing:
a classic process in two versions
• Integrated
In the accounting/finance/ERP solution the verification and
approval process is implemented with an internal, integrated
workflow.
The invoice transaction data set under examination is linked to
the associated documents and these can be displayed
through a viewer inside the financial application.
• Autonomous
A separate software is used to link the documents under
examination to the associated data and transfer the correct
data to the accounting/ finance/ERP solution based on the
result. The documents are kept in the separate system,

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Processing
• For efficient automated invoice processing the
correct entry data, policies for processing (e.g.
discounting, contract management et al.) and
payment are necessary (in future direct e-payment).
• Documents are not required for the booking,
accounting and payment processes, but are only
linked as record to these transactions.

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Integration into application environment
• Special software applications are necessary for EDI
processing.
• With EDI invoice processing can be completely
automated.
• Its use is limited to large companies and to industry-
specific solutions.
This raises the question for companies already using
EDI:
why do we need an other e-invoice format and process?

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Integration into application environment
• EDI
• Capture systems for processing different types of
information. Special systems are available for the
invoice capture processing:
• Scanning with OCR/ICR/classification, data
extraction, even recalculation
• Interpretation of electronic invoice based on e-mail,
word, pdf or other formats with classification and data
extraction
• Creation and provision of consistent in-house
document and data formats for further processing
• Connection to mailbox systems, invoice approval and
release applications and ERP systems

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Medium-sized and large companies: processing
Accounting/ERPE-mail
Portal
Fax
EDI / X.400
Master
data
Invoice
evaluation
Invoice
approval
Data
Daten
Document
Data/document
Document
Converter
Paper
Scan
QS
OCR/
ICR
Data
Data
Data
Data
et al.
Classification

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General Challenges for Automation
• Identifying the invoice being an invoice
• False and missing data:
• VAT ID
• VAT / reverse charge issues
• Incomplete references
• First time invoice submission of a new business partner
• External identification and numbering systems
• Changes in identification, product or address data yet
unknown to the ERP or master data systems
• Multilinguality
• Fraud

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Medium-sized and large companies: follow-up
Finance/ERP
Retention
Approval and
release process
Analytics
Payment Transfer
e-Banking
Audit trails
Cashflow
Management
Currency
Management
et. al.
Procurement

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Processes
Storing and managing electronic
invoices
Major Processes
• Archiving
• Retention management
• Auditing

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S & R Administration and retention
Invoices are subject to retention requirements.
They are also subject to legal requirements.
• Structured data
The management of bookings and transactions
generally takes place in an accounting, finance or
ERP system.
These systems ensure correctness and compliance
with software controls.
As long as data subject to retention requirements is
not migrated from this primary system, its correct
retention is generally assured.

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Invoices are subject to retention requirements. They are also subject to legal requirements.
• Booking and accounting data
• Evidence records
If booking data and evidence record are not identical
(e.g. in EDI), the evidence record for a transaction must
be retained and be permanently linked to the transaction
data set (same index for both for retrieval and access
purposes)

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• Booking and accounting data
• Evidence records
• Evidence records and unstructured documents
are often stored separately in a records management
and/or auditable electronic archive system.
The architecture differs depending on:
• Access is possible only through the ERP system, which
manages the metadata and access pointers to the
repository (HSM approach)
• Access is possible via an own database of the Records
Management or Archive solution, independent of the
ERP system, (integrated approach).
This allows the use of archived data and documents by
other systems, and the relief of the ERP from older
unnecessary information.

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HSM & auditable archiving
HSM
Archive
BPMCapture E-mailERP ERP et al.
Retention & Archiving
Retention management
only via ERP,
the index is part of the
ERP database.
Retention and other services usable via all connected
applications, since the archive has its own access,
metadata, administration and retrieval information.

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What needs to be retained?
• Data from accounting/ERP and other related
systems in machine-readable form
• Evidence (documents, datasets) in direct accessible
form.
If originally machine-readable, this ability must be
preserved
• Context of the complete business transaction (this
is much more than only the invoice and the invoice
data)
• Audit trails of the processing and the retention
operations
• Descriptions of systems, processes, operating
procedures used

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Process security and auditability
The integration of electronic invoices into existing
system landscapes often affects many systems,
directly or indirectly.
Two requirements need to be considered:
• Consistent process security
This can be controlled and secured via appropriate
process or workflow software.
• Consistent auditability
This can be secured through audit trails that record
all process transactions concerning the invoice end
to end.

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3 EPILOGUE
Integration of E-Invoicing
Into The Existing IT Landscape

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Epilogue
Conclusions
• Get rid of paper
• The process is more important than the format
• Automation is the key
• All finance and ERP software products MUST
support electronic invoicing, generation and
reception, both ways

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Epilogue
Local, regional and global
• International business transactions require
international standards
• Government requirements cannot be the only
measure for invoice standards, because public
sector organisations act mainly on a national level
• Further legal harmonization is needed; i.E. retention
criteria and periods, identification a.s.o.
• Get rid of old proprietary technologies
• e-invoicing is only the first step of business
automation – lets go for procurement and other
processes!

Logo 2 U n t e r n e h m e n s b e r a t u n g
D r . U l r i c h K a m p f f m e y e r G m b H
PROJECT CONSULT
PROJECT CONSULT
Unternehmensberatung Dr. Ulrich Kampffmeyer GmbH
www.PROJECT-CONSULT.com
© PROJECT CONSULT 2015
88
P.O. Box 20 25 55
D-20218 Hamburg
Have a great conference!
Dr. Ulrich Kampffmeyer
E-Mail: Ulrich.Kampffmeyer@PROJECT-CONSULT.com
Presentation, further information...
Visit: www.PROJECT-CONSULT.com
PDF-Handout http://bit.ly/EInvoice2015-Kff
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[EN] Keynote Exchange Summit: Integration of E-Invoicing Into The Existing IT Landscape | Dr. Ulrich

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[EN] Keynote Exchange Summit: Integration of E-Invoicing Into The Existing IT Landscape | Dr. Ulrich